Institutional lenders in Canada follow strict rules to prevent them from giving mortgages to people who do not qualify. It has long been established that the most important thing done by banks when making decisions on loans is checking credit score. This is a three-digit number generated from your credit report as a way of showing banks what kind of a borrower you are. In Canada, the credit score numbers range from 300-900 and it is better if you have a higher credit score. We have a large network of lenders offering bad credit mortgages in Napanee and other cities in Ontario.

Credit Score Numbers Needed by Different Lenders.

  • 600 points are needed by banks
  • Credit unions need 550 points to approve a mortgage
  • Private lenders will not ask to see your credit score

How to Check Your Credit Score

The main credit bureaus are Transunion and Equifax both of whom use different methods to calculate a credit score. The score is determined by your credit report to inform potential lenders exactly what kind of risk you carry. Banks and any other institutional lender you will approach to give you a loan can easily pull your score directly from the bureau. It is your responsibility to visit the credit bureau website to request the report and check that there are not any errors. Our brokerage also does credit reporting so if you need a copy just contact us to get it free. Bad credit is usually associated with writing bad checks, late payments, and nonpayment of loans.

Bad Credit Mortgage Lenders in Napanee

If your credit report comes back with a low score 550 of points, then only private lenders can advance you the loan. Our bad credit mortgage lenders in Napanee, Ontario can provide the money without paying attention to your score. Lenders who do not care about the financial constraints facing their clients provide bad credit mortgages. They will lend you a mortgage even if you are facing a consumer proposal, bankruptcy, or low credit score.

Approval Criteria for Bad Credit Mortgages

They do not rely on credit score when assessing client risk but rather rely on the LTV of a home to inform their lending decision. Bad credit mortgage lenders in Napanee calculate loan to value ratio by dividing the total value of loans against a property by its current selling price. They will easily lend to the property with 75% LTV but not more. The loan to value ratio shows a lender just how much equity the borrower has in their home. If it is below 15% there is little chance of profiting from its sale if the client defaults. The mortgage agreement signed for a bad credit mortgage give the power of sale to the lender if a client is unable to repay money owed. According to the mortgage act, a bad credit mortgage lender cannot recoup before other mortgage lenders are compensated. High LTV means that there might not be enough gains from the sale of a property to cover everyone owed.

Bad Credit Mortgage Fees and Rates

Bad credit mortgage lenders in Napanee charge notably high interest on mortgages but there are valid reasons for that. Lending to people with bad credit is very risky for the investor who must try to recover as much of their money before borrowers fail to repay. Private lenders require 7%-15% interest to provide a mortgage, you must also be able to pay the lawyer, and home appraiser among other professionals needed to complete the mortgage set up the process. Bad credit lenders avoid property with too much debt against it as it would not be of profit to their real estate business.

Gradually Improve Your Credit Score

Some of the reasons for a bad credit score are taking more debt than you can afford failure to pay bills and nonpayment of loans. You can deliberately improve your credit score by meeting all your obligations. Make sure that all pending debts are cleared to give you a clean slate. If you use a credit card, only make small charges. This makes monthly credit card repayments more affordable so that you are never late.

To speed up the process you can use a secured credit card, which usually has a deposit to secure debt. Payments can be deducted from this deposit to avoid a bad credit report but you must be careful not to surpass the 60% limit on the card. If you are consistent, it will take 6 months to remedy a poor credit score.

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